Can my e-commerce business survive a recession?

In these uncertain times, I think this should be a major question for every e-commerce owner. 

Below are some areas you can focus on, specifically with Google Ads and digital marketing in general.

Advice on what to look out for and examples of how it can affect the overall profitability and performance of your e-commerce brand.

The truth is that small changes in the right places can have a big impact on your bottom line. We see this daily with our clients.

1. Kill unprofitable ads

This one seems simple enough but do you know which of your ads and campaigns are actually profitable? And no, I don’t mean just looking at your ROAS. Your ROAS shows your Return (or Revenue) on ad spend, it doesn’t show your profit on ad spend (aka PROAS), so you have to dig deeper.

The easiest step in focusing on profitability is to create a margin-based system for your products. 

Basically, you would add custom labels to your products and categorize them by a margin as High, Medium, and Low margin products.

This way you would have better control over budget allocation and profit per category and use the tRoas objective more efficiently.

However, even if you didn’t follow this recommendation, at least follow this advice – do not run ads that are not hitting your target ROAS. This should be the bare minimum.

2. Focus on scaling profitable ads

Now that you have found and killed your unprofitable ads you can allocate their budgets to the best-performing (and most profitable) ads in your account and amplify their reach.

3. Increase the conversion rate of your website

One of the first things we do with potential new clients is to check their website and see how well it’s converting. We want to make sure that the users we send to the website have a clear path to the checkout and the purchase. 

Here you can differentiate between soft and hard conversions. A soft conversion is usually a newsletter signup which you can use later on for remarketing, while a hard conversion is an actual purchase of a product. You should track both.

CRO is a massive topic but here are some tips for increasing your conversion rate:

• Install tracking software like Hotjar, CrazyEgg, or Microsoft Clarity (it’s free) and analyze the data it captures
• Add social proof like product and service reviews on your website, especially on the Product, Checkout, and Landing pages
• Add live chat and a phone number
• Have high-quality images and explainer videos
• Survey your customers
• Simplify the Checkout page by excluding unnecessary input fields
• Make sure your website is responsive
• Have clear CTAs (Call-to-action)
• Have a popup strategy to capture emails
• Clearly write all the features, benefits, warranty, and shipping information on the Product Pages
• Add Klarna, Affirm, or similar services

4. Increase the average order value (AOV)

You’re hungry so you go for a burger but you end up buying a burger, fries, a drink, and dessert?!

You’ve just been up-selled and cross-selled. 

And this is what you need to be doing on your website too. You need ways to nudge customers to spend a little bit more and drive the AOV up, which makes your advertising more effective. 

When thinking of strategies to increase AOV, be sure to focus on your most frequent order values as your starting point.

A few more tips to increase AOV:

• Offer a Free Shipping Threshold
• Bundle products 
• Add product recommendations on Product Pages
• Add loyalty programs and discounts

Read more tips on how to double your Average Order Value in our How to Increase Your Average Order Value article.

5. Improve your customer retention

Now even if you applied all of the above tactics, you will still have around 98% of people who come to your site and don’t buy anything.

We have to find a way to get those visitors back and convert them into buyers at some point in the future. You know the saying, it’s way cheaper to keep a customer than to get a new one.

This is where retention marketing comes into play and the soft conversions I mentioned in point #3. 

First, you need to have remarketing/retargeting campaigns set up on Google and Facebook so that you can advertise to the visitors that didn’t engage with your pop-up or newsletter sign-ups.

Then, you should have a system to keep in touch with your existing customers and build a relationship with them. This is usually done through email marketing or SMS marketing, or both. 

Keep your customers updated on your new products, offers, and discounts.

When it comes to email/SMS marketing you should also consider having automated flows set up for:

• Exit intent
• Cart/Browse abandonment
• Post-purchase
• Back-in-stock flow
• Welcome flow
• Winback/Reactivation

That’s it. I hope that this non-exhaustive list will help you navigate a recession easily!

How are you preparing your e-commerce brand for a recession?

If you need help with optimizing your Google Ads and making them more profitable – contact us!